On 9 September 2021 the Draft Law No. 5464 dated 5 May 2021 was adopted in the first reading, which, if adopted in full, will establish regulation on biomethane in Ukraine. In order to enter into force, it must be voted in the second reading, signed by the President of Ukraine and officially published.
The following is a summary of the Biomethane Draft Law.
Definition of biomethane and the biomethane register
Producing up to 7.8 billion cubic metres of biomethane annually, Ukraine boasts significant potential for the production and transmission of biomethane on the basis of its developed agricultural industry and gas transmission system. The authors of the Biomethane Draft Law anticipate that by 2050, biomethane production in Ukraine could increase up to 17 billion cubic meters. The development of the biomethane industry, however, requires establishing a regulatory framework for it.
In line with the above, the Biomethane Draft Law defines "biomethane" as biogas, which by its physical-technical characteristics complies with the requirements for natural gas for its injection into the gas transportation and distribution systems or for usage as fuel for vehicles.
In order to inject biomethane into the gas transportation and distribution systems, biomethane producers must be included in the biomethane register to be managed by the State Agency on Energy Efficiency and Energy Saving of Ukraine (SAEE). The introduction of the biomethane register is in line with the approach of Directive 2018/2001 on promoting the use of energy from renewable sources with respect to setting of databases that ensure transparency and traceability of renewable fuels.
The Biomethane Draft Law further clarifies that provision of access to the gas transportation and gas distribution systems for biomethane producers is performed in accordance with the Law of Ukraine "On Natural Gas Market" and under the procedures established by the transmission system and distribution systems codes.
Notably, on the EU level, biomethane is regulated through the European decarbonisation process, which establishes a number of requirements for biomethane, including:
- possible types of biomethane production systems and technological options for the production of biomethane; and
- requirements for greenhouse gas emissions savings during biomethane production.
The Biomethane Draft Law, however, does not envisage such requirements.
Biomethane guarantees of origin
According to the Biomethane Draft Law, SAEE can issue guarantees of origin of biomethane on the basis of the biomethane register.
A biomethane guarantee of origin can be issued under the following procedure:
- A biomethane producer is included in the biomethane register.
- Each month, the biomethane producer records into the biomethane register the volume of biomethane that was injected by such biomethane producer into the gas transmission or gas distribution systems.
- Biomethane guarantee of origin is provided free of charge in the electronic form to the biomethane producer within three business days after completion of item 2 above by biomethane producer.
The biomethane guarantee of origin can be transferred, distributed and annulled. Additionally, the Biomethane Draft Law introduces a biomethane certificate of origin that may be issued by the SAEE. However, the Biomethane Draft Law states that the the biomethane register functioning procedure, to be approved by the Cabinet of Ministers of Ukraine, will establish the respective procedures.
For the purpose of consumption of biomethane outside of Ukraine, the Biomethane Draft Law also envisages that SAEE can execute agreements on cooperation in relation with biomethane registers with similar authorities of foreign jurisdictions.
CMS will continue to monitor energy reform news and will keep you updated on any developments.
For more information on this Biomethane Draft Law, contact your local CMS advisor or local CMS experts: Vitaliy Radchenko, Maryna Ilchuk, Anatolii Doludenko, Maria Orlyk, Taras Chernikov, Yuliia Pidlisna.
Legislation:
Draft Law "On amendments to the Law of Ukraine "On Alternative Fuels" on the development of biomethane production" No. 5464 dated 05 May 2021 (in Ukrainian).
Authors:
Vitaliy Radchenko, Partner, vitaliy.radchenko@cms-cmno.com
Maryna Ilchuk, Senior Associate, maryna.ilchuk@cms-cmno.com
Anatolii Doludenko, Associate, anatolii.doludenko@cms-cmno.com
Maria Orlyk, Partner, maria.orlyk@cms-rrh.com
Yuliia Pidlisna, Senior Associate, yuliia.pidlisna@cms-rrh.com
Taras Chernikov, Associate, taras.chernikov@cms-rrh.com
